Samsung faces two-front patent war as Ericsson files suit in Texas

Samsung is already embroiled in a worldwide patent fight with Apple, but the company will now face a patent attack from another direction. Swedish telecom giant Ericsson sued Samsung today, saying the Korean company wouldn't renew a patent cross-licensing agreement after two years of negotiation.

Samsung refused a deal on terms that the rest of the industry has accepted, Ericsson representatives said today. The specific terms offered weren't disclosed, but documents show they were "Fair, Reasonable, and Non-Discriminatory," or FRAND. Just what constitutes a FRAND rate is very much in dispute right now, however, with multiple US federal courts and the US International Trade Commission considering the issue. Samsung licensed Ericsson's standards-essential patents in 2001 and again in 2007, but its license has now expired. "Samsung’s refusal to pay a FRAND rate gives it an unfair competitive advantage over its competitors who have licensed Ericsson’s patents," write Ericsson lawyers in today's filed lawsuit.

"Ericsson has over 30,000 patents and more than 100 license agreements with all major players in the industry. Ericsson has tried long and hard to amicably come to an agreement with Samsung and to sign a license agreement on FRAND terms. We have turned to litigation as a last resort," said Kasim Alfalahi, Ericsson's chief IP officer.

One possible problem for Samsung: in its patent battle with Apple, Samsung is also relying on patents that it has agreed to license at FRAND rates. Ericsson hits that point in its lawsuit, declaring that "Samsung has a history of manipulating its position on the amount of a FRAND rate depending on whether it finds itself as the licensor or licensee in a particular negotiation... when the tables are turned and Samsung finds itself in the position of being the prospective licensee, it now refuses to license Ericsson’s standard-essential portfolio at FRAND rates." Ericsson's lawyers continue: "Contrary to Samsung’s behavior, patent licensing under FRAND terms does not change from one day to the next depending on whether a company finds itself aligned as a licensor or licensee."

In fact, it's possible one reason negotiations collapsed is because Samsung is now in a position where it has to insist that its FRAND patents have a lot of value. After all, those are the patents it's using to fight back against Apple's patent attack.

But it's impossible to know. According to Samsung, Ericsson's licensing rates have simply gotten too expensive. In an e-mailed statement, a Samsung spokesperson said, “We have faithfully committed ourselves to conducting fair and reasonable negotiations with Ericsson over the past two years, but this time Ericsson has demanded significantly higher royalty rates for the same patent portfolio."

Ericsson filed two lawsuits, both in the Eastern District of Texas, alleging infringement of 24 patents in all (see lawsuit No. 1 and No. 2). While that district is famous as a place patent plaintiffs like to venue-shop, Ericsson's US headquarters is actually within the district (in Plano, Texas). The patents cover a wide array of technologies used in telephones, base stations, televisions, computers, Blu-ray players, cameras, and wireless devices, according to the complaints.

The Swedish company targeted networking equipment makers D-Link, Netgear, and Gateway in a separate patent suit filed in 2010. That litigation is ongoing and scheduled to go to trial in East Texas in mid-2013. It includes at least one patent also being used in the dual lawsuits against Samsung.

I just want to get this out of the way:Ericsson is the worldwide performance/feature leader in back-end wireless technology. It's definitely a practicing entity. ERLANG and Bluetooth are Ericsson technologies.

Hey, remember when that ITC judge threw out Apple's case against your FRAND patents because they didn't use the ITC's method for negotiating a rate when the FRAND holder's demands seem excessive? You should have done that with Ericsson instead of keep negotiating on your own. Seems like trying to have your cake and eat it too if you don't use the method that saved your ass when it's your side on the line.

Hey, remember when that ITC judge threw out Apple's case against your FRAND patents because they didn't use the ITC's method for negotiating a rate when the FRAND holder's demands seem excessive? You should have done that with Ericsson instead of keep negotiating on your own. Seems like trying to have your cake and eat it too if you don't use the method that saved your ass when it's your side on the line.

But Samsung didn't file the suit, so it's a little different. Maybe Samsung did want to use that process and Ericsson skipped to a lawsuit? We don't knows what's been proposed in Negotiations.

Well someone has to say it. If Apple can get away with it, why not Samsung?

Because the court found that Apple didn't infringe?

EDIT: I'm confused, the FRAND patents were found to be worth $0, I believe, in court.

It was a jury that found Apple did not infringe, not the court. If the court had, it would a significantly indicate stronger case on Apple's part as only more obvious issues get granted summary judgement. Since this went to the jury, there was reasonable doubt on the matter.

Samsung is really screwed on this one. They're not in a position to argue the patents are irrelevent, or abusive, or prior art exists and they shoudl be invalidated, they WERE paying them. Also, if Erricson is correct, that even if the prices have gone up (normal), the fact that others already agreed to those increases, and FRAND is established at those tiers, without discriminatory price giouging like moto and HTC tried on Apple and MS (which has mostly failed, and/or resulting in government investigations of abusive practices), these do seem to be estabished rates. Samsung refusing to license patents on terms extended to and accepted by others on patents they themselves previously licensed? This will hit courts quickly, and end VERY bandly for Samsung if they fail to settle. If the ITC perceives a pattern, bad faith patent licensing negotiation over FRAND in general, they can go further than individual product injunctions or fines and ban Samsung mobile from selling to the USA entirely. Samsung bneeds to get out ahead of this, say they're sorry, and beg Sony to accept their money.

This is just getting silly. There's so much litigation and counter-litigation over patents that I can't keep up with it anymore--as I'm sure few can. I'm not on any given corporation's side on this, either. They're all trying to screw one another and get ahead in some fashion. Good faith negotiation certainly seems to be endangered at this point.

Well someone has to say it. If Apple can get away with it, why not Samsung?

Because the court found that Apple didn't infringe?

EDIT: I'm confused, the FRAND patents were found to be worth $0, I believe, in court.

It was a jury that found Apple did not infringe, not the court. If the court had, it would a significantly indicate stronger case on Apple's part as only more obvious issues get granted summary judgement. Since this went to the jury, there was reasonable doubt on the matter.

A jury decision is considered to be every bit as strong as one made by a judge, even stronger, in many instances.

Why the government agrees to pay for these cases in this first place should be the outrage. You really should force these companies through arbitration, and if they can't come to a conclusion have a judge decide according to the letter of the law. But obviously the Texas court is in on the scam so that won't work.

This is just getting silly. There's so much litigation and counter-litigation over patents that I can't keep up with it anymore--as I'm sure few can. I'm not on any given corporation's side on this, either. They're all trying to screw one another and get ahead in some fashion. Good faith negotiation certainly seems to be endangered at this point.

Samsung is really screwed on this one. They're not in a position to argue the patents are irrelevent, or abusive, or prior art exists and they shoudl be invalidated, they WERE paying them. Also, if Erricson is correct, that even if the prices have gone up (normal), the fact that others already agreed to those increases, and FRAND is established at those tiers, without discriminatory price giouging like moto and HTC tried on Apple and MS (which has mostly failed, and/or resulting in government investigations of abusive practices), these do seem to be estabished rates. Samsung refusing to license patents on terms extended to and accepted by others on patents they themselves previously licensed? This will hit courts quickly, and end VERY bandly for Samsung if they fail to settle. If the ITC perceives a pattern, bad faith patent licensing negotiation over FRAND in general, they can go further than individual product injunctions or fines and ban Samsung mobile from selling to the USA entirely. Samsung bneeds to get out ahead of this, say they're sorry, and beg Sony to accept their money.

What both Motorola and Samsung have tried to do is to charge Apple appreciatively higher rates than others. Both have also attempted to get licensees of their patents to allow them to ignore the patent exhaustion clauses written into their contracts for products made with those patents so that they could sue Apple. The licensees have refused. Both companies have attempted to sue over those patents anyway. They have lost those cases.

How is a patent worth $1 for one product, and $2, or $10 for a different product? Just because one product sells for more?

All these FRAND patents should be a specific price, not a percentage of the products cost.

Most FRAND patents are licensed in a large pool. So there may be a dozen, a hundred, or even a thousand patents in a pool. No company could afford to make a product if each of these patents were to be licensed to them individually. So a thousand patents in a pool may go for .5% of the cost of the product. So how much is just one of those patents worth if a company decides to remove it from the pool? Obviously, very little.

The truth is that since EVERY one of those patents is required, none of them is worth much by itself. Demanding 2.5% of the cost of a patent (or two or three) therefor is absurd. Apple has stated in a case with Motorola, which the judge just threw out, that they would pay no more than 1%. The judge wasn't happy with that, and it was why the case was thrown out.

I think the judge was cockeyed there. Even if Apple hadn't stated that, they would have appealed if it were over 1%, so the situation would have been exactly the same. But even 1% for those patents is generous.

This is just getting silly. There's so much litigation and counter-litigation over patents that I can't keep up with it anymore--as I'm sure few can. I'm not on any given corporation's side on this, either. They're all trying to screw one another and get ahead in some fashion. Good faith negotiation certainly seems to be endangered at this point.

F*** design/software patents. Seriously.

Except this isn't about design or SW patents.

Forgive my ignorance on the subject--I'm certainly no expert. But I saw 'patent war' in the title, and mentioned elsewhere in the story, and assumed it to be an extension of what's been going on for a while. Even Ars frames it in that context.

That said, take what I'm saying as a lay-person's perception; surely you agree that the court battles between the major players in this industry are getting out of hand? This seems like more squabbling in that arena. I'm just tired of it.

Well someone has to say it. If Apple can get away with it, why not Samsung?

Apple is not trying to play both sides of the issue.

Samsung is arguing that FRAND should be priced higher when they are using them against Apple.

Samsung is now arguing that FRAND should be priced lower when they are being used by Ericsson against them.

Apple also has a number of FRAND patents from the Nortel purchase and hasn't used any of them as a weapon and has made a commitment to keep FRAND workable.

FRAND patents have to remain economical or standards fall apart. There are thousands of FRAND patents needed to build a smartphone, held by dozens of entities. If they all charge >2% for FRAND patents you soon get to the point where >100% of device price would be needed to be paid out to patent holder, at which point it would become impossible to build devices based on wireless standards.

FRAND is needed for the industry to work and abusers should be dealt with severely.

More Patent BS and as you can see this is happening in East Texas.And I have read enough News of how Texas Courts Act favorably to Patent Trolls.I am getting pretty sick of Reading thru these Patent News Stories.

But Samsung didn't file the suit, so it's a little different. Maybe Samsung did want to use that process and Ericsson skipped to a lawsuit? We don't knows what's been proposed in Negotiations.

Ericsson claims that they tried negotiating for two years. If true, that might be in their favor - apparently so did Nokia before they sued Apple a few years back, and that lawsuit resulted in a massive payout. Ericsson is absolutely not trying to shut Samsung out of anything - Ericsson no longer makes mobile phones (they sold that division off to Sony), but they do make the network base stations, and it is very much in their interest that the mobile phone market is strong, as that drives demand for their products. My take on this is that Samsung thought Ericsson wouldn't sue (they rarely do, IME) and just kept stalling.

More Patent BS and as you can see this is happening in East Texas.And I have read enough News of how Texas Courts Act favorably to Patent Trolls.I am getting pretty sick of Reading thru these Patent News Stories.

This is just getting silly. There's so much litigation and counter-litigation over patents that I can't keep up with it anymore--as I'm sure few can. I'm not on any given corporation's side on this, either. They're all trying to screw one another and get ahead in some fashion. Good faith negotiation certainly seems to be endangered at this point.

F*** design/software patents. Seriously.

Except this isn't about design or SW patents.

Forgive my ignorance on the subject--I'm certainly no expert. But I saw 'patent war' in the title, and mentioned elsewhere in the story, and assumed it to be an extension of what's been going on for a while. Even Ars frames it in that context.

That said, take what I'm saying as a lay-person's perception; surely you agree that the court battles between the major players in this industry are getting out of hand? This seems like more squabbling in that arena. I'm just tired of it.

Are you saying Ericsson shouldn't get paid for their work? They went through the process, got the patents included into the standard, licensed them to everyone, and Samsung refuses to pay.

More Patent BS and as you can see this is happening in East Texas.And I have read enough News of how Texas Courts Act favorably to Patent Trolls.I am getting pretty sick of Reading thru these Patent News Stories.

You aren't required to read any of them. If they bother you so much, just leave them alone. And Ericsson is certainly not a patent troll.

Yes, the jury found them to not infringe AND expert testimony says the license cost was nominally $0 since it had always been cross licensed for other patents.

Of course, given that those patents clearly have value, it isn't -actually- worth $0.

Quote:

A jury decision is considered to be every bit as strong as one made by a judge, even stronger, in many instances.

Not really, no. They don't set any sort of meaningful precedent.

Quote:

Samsung is now arguing that FRAND should be priced lower when they are being used by Ericsson against them.

The problem is, to put it bluntly, this is a he-said she-said situation. We don't know the rates, we don't know whether or not they're being changed in an unreasonable fashion, we don't really know anything.

The real problem is that FRAND needs to actually mean something, and the patent office needs to do its job and reject a lot more patents.

Yes, the jury found them to not infringe AND expert testimony says the license cost was nominally $0 since it had always been cross licensed for other patents.

Of course, given that those patents clearly have value, it isn't -actually- worth $0.

In the same court it was revealed that Apple had offered to cross license their patents that nominally were worth $6 for $0.

Quote:

Quote:

A jury decision is considered to be every bit as strong as one made by a judge, even stronger, in many instances.

Not really, no. They don't set any sort of meaningful precedent.

Quote:

Samsung is now arguing that FRAND should be priced lower when they are being used by Ericsson against them.

The problem is, to put it bluntly, this is a he-said she-said situation. We don't know the rates, we don't know whether or not they're being changed in an unreasonable fashion, we don't really know anything.

The real problem is that FRAND needs to actually mean something, and the patent office needs to do its job and reject a lot more patents.

FRAND does mean something. It's why Ericsson tried negotiating for two years before filing suit.

The problem isn't FRAND, per se, it's companies using FRAND as a bludgeon in the patent system to try and get injunctions on competitors products. Ericsson isn't trying to stop Samsung, they actually want Samsung to sell more, but they want Samsung to pay for the products that use these patents.

Samsung is now arguing that FRAND should be priced lower when they are being used by Ericsson against them.

The problem is, to put it bluntly, this is a he-said she-said situation. We don't know the rates, we don't know whether or not they're being changed in an unreasonable fashion, we don't really know anything.

No we don't know but it is safe to assume that what Samsung has publicly demanded Apple should pay for FRAND licences for its patents is now what Ericsson is asking Samsung to pay for theirs. All's fair in love and war...